• Canadian Home Buyers Remain On the Sidelines In April As New Listings Surge.

    External Author   |  

    Blog by Kolbi Turner

    Homebuyers cautious as new listings surge in April

    The Canadian Real Estate Association (CREA) announced today that national home sales dipped in April 2024 from its prior month, as the number of properties available for sale rose sharply to kick off the spring housing market.

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  • Great News On The Canadian Inflation Front.

    External Author   |  

    Blog by Kolbi Turner

    The Consumer Price Index (CPI) rose 2.8% year-over-year in February, down from the 2.9% January pace and much slower than the 3.1% expected rate. Gasoline prices rose in Canada for the first time in five months, which led many analysts to forecast a rise in February inflation as seen in the US. However, offsetting the increase in gas prices was a deceleration in the cost of cellular services, food purchased from stores, and Internet access services.

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  • Bank of Canada Holds Rates Steady and Continues QE Program

    External Author   |  

    Blog by Kolbi Turner

    Bank of Canada Holds Target Rate Steady Until Inflation Sustainably Hits 2%

    The Bank of Canada under the new governor, Tiff Macklem, wants to be “unusually clear” that interest rates will remain low for a very long time. To do that, they are using “forward guidance”–indicating that they will not raise rates until capacity is absorbed and inflation hits its 2% target on a sustainable basis, which they estimate will take at least two years.

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  • Great News On The Canadian Inflation Front.

    External Author   |  

    Blog by Kolbi Turner

    The Consumer Price Index (CPI) rose 2.8% year-over-year in February, down from the 2.9% January pace and much slower than the 3.1% expected rate. Gasoline prices rose in Canada for the first time in five months, which led many analysts to forecast a rise in February inflation as seen in the US. However, offsetting the increase in gas prices was a deceleration in the cost of cellular services, food purchased from stores, and Internet access services.

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  • Great News On The Inflation Front Cause Big Bond Rally.

    External Author   |  

    Blog by Kolbi Turner

    Canadian inflation falls to 2.9% in January, boosting rate cut prospects

    The Consumer Price Index (CPI) rose 2.9% year-over-year in January, down sharply from December’s 3.4% reading. The most significant contributor to the deceleration was a 4% decline in y/y gasoline prices, compared to a 1.4% rise the month before (see chart below). Excluding gasoline, headline CPI slowed to 3.2% y/y, down from 3.5% in December.

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  • Bank of Canada Holds Rates Steady And Forecasts a Soft Landing.

    External Author   |  

    Blog by Kolbi Turner

    the bank of canada holds rates steady and expects rate cuts later this year

    Today, The Bank of Canada held the overnight rate at 5% for the fourth consecutive meeting but provided an outlook suggesting that monetary easing will begin by mid-year. The Bank forecasts a soft landing for the Canadian economy, with inflation falling to 2.5% by the end of this year. While some economists predict a recession, the Bank suggests that “growth will likely remain close to zero through the first quarter of 2024” and “strengthen gradually around the middle of 2024.” This would be a soft landing.

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  • Q3 GDP Weaker Than Expected Paving The Way For Future Rate Cuts.

    External Author   |  

    Blog by Kolbi Turner

    The Table Is Set For Rate Cuts In 2024

    The Canadian economy weakened far more than expected in the third quarter, down 1.1% annually. However, the Q2 figures were revised up significantly from a 0.2% decline to a rise of 1.4%. Such are the vagaries of economic data. The Canadian economy is contracting despite the positive impetus of rapid population growth. Household consumer spending flatlined, and the savings rate rose, confirming that the central bank’s aggressive interest-rate hikes are doing their job to slow economic activity.

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  • Hawkish Hold By The Bank of Canada

    External Author   |  

    Blog by Kolbi Turner

    The Bank of Canada today held its target for the overnight rate at 5%, as was widely expected. The central bank continues to normalize its balance sheet through quantitative tightening, reducing its Government of Canada bonds holdings.

    The Monetary Policy Report (MPR) detailed a slowdown in global economic growth “as past increases in policy rates and the recent surge in global bond yields weigh on demand.” Continued increases in longer-date bond yields reflect the stronger-than-expected growth in the US, where the Q3 economic growth rate, released tomorrow, is expected to be a whopping 5%. Ten-year yields in the US have risen to nearly 5%, boosting fixed mortgage rates in Canada.

    Oil prices are higher than was assumed in the July MPR, and the war in Israel and Gaza is a new source of geopolitical uncertainty.

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  • Canadian Inflation Dips to 3.8% Keeping BoC On The Sidelines

    External Author   |  

    Blog by Kolbi Turner

    Good news on the inflation front suggests policy rates have peaked

    Today’s inflation report for September was considerably better than expected, ending the three-month rise in inflation. Not only did the headline inflation rate fall, but so did the core measures of inflation on a year-over-year basis and a three-month moving average basis. This, in combination with the weak Business Outlook Survey released yesterday, suggests that the overnight policy rate at 5% may be the peak in rates. While I do not expect the Bank to begin cutting rates until the middle of next year, the worst of the tightening cycle may well be over.

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  • August Inflation Hotter Than Expected In Canada

    External Author   |  

    Blog by Kolbi Turner

    August Inflation Hotter Than Expected

    Canada’s inflation rate accelerated more than expected for the second consecutive month, mainly driven by higher gasoline prices. This will not be a one-month wonder as gasoline prices rose further in September. 

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  • Bank of Canada Holds The Overnight Policy Rate Steady at 5%

    External Author   |  

    Blog by Kolbi Turner

    Bank of Canada Holds Rates Steady Acknowledging Economic Slowdown

    With last Friday’s publication of the anemic second-quarter GDP data, it was obvious that the Bank of Canada would refrain from raising rates at today’s meeting. Economic activity declined by 0.2% in Q2; the first quarter growth estimate decreased from 3.1% to 2.6%.

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  • Weaker Than Expected Jobs Report Portends No Rate Hike By BoC

    External Author   |  

    Blog by Kolbi Turner

    The long-awaited labour market slowdown The Canadian economy shed 6,400 jobs in July, far weaker than the 25,000 gain that was expected. The jobless rate was 5.5%, the third consecutive monthly rise. This likely improves the chances the Bank of Canada will remain on the sidelines in September. Wage inflation, however, re-accelerated, moving back to 5.0%. This, combined with the continued stickiness in core inflation, will keep interest rates high for longer. July’s data follows a surprise gain of 59,900 in June and a 17,300 loss in May, showing that employment is a notoriously volatile series. Nevertheless, it provides the fodder for Macklem…

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  • Bank of Canada Hikes Policy Rate By 25 BPs to 5.0%–Highest in 22 Years

    External Author   |  

    Blog by Kolbi Turner

    Interest rates will stay higher for longer

    The Bank of Canada increased the overnight policy rate by 25 basis points this morning to 5.0%, its highest level since March 2001. Never before has a policy action been so widely expected. Still, the Bank’s detailed outlook in the July Monetary Policy Report (MPR) suggests stronger growth and a longer trajectory to reach the 2% inflation target. The Bank of Canada believes the economy is still in excess demand and that growth will continue stronger than expected, supported by tight labour markets, the high level of accumulated household savings, and rapid population growth. “Newcomers to Canada are entering the labour force, easing the labour shortage. But at the same time, they add to consumer spending and demand for housing.”

    The Bank forecasts GDP growth to average 1.0% through the middle of next year–a soft landing in the economy. “This means the economy moves into modest excess supply in early 2024, and this should relieve price pressures. CPI inflation is forecast to remain about 3% for the next year, before declining gradually to the 2% target in the middle of 2025.” This is about six months later than the Bank expected in April. This means that high-interest rates remain higher for longer.

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  • In an Aggressive Move, the BoC Hikes the Policy Rate by 25 BPs

    External Author   |  

    Blog by Kolbi Turner

    In an Aggressive Move, the BoC Hikes the Policy Rate by 25 BPs

    Holy smokes, the bank of canada means business

    If there were any doubt that the Bank of Canada wanted inflation to fall to 2%, it would be obliterated today. In a relatively surprising move, the Bank hiked the overnight policy rate by 25 bps to 4.75%, and an equivalent hike will follow in the prime rate. Fixed mortgage rates had already leaped higher even before today’s move as market-determined bond yields have risen in the wake of the US debt-ceiling debacle. Now variable mortgage rates will increase as well. The central bank is determined to eliminate the excess demand in the economy.

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  • Canadian CPI Inflation Ticked Up For The First Time In Nearly A Year.

    External Author   |  

    Blog by Kolbi Turner

    Canadian Inflation Rose More Than Expected in April, But Core Inflation Slowed

    There’s been an unexpected hiccup in the Bank of Canada’s ongoing battle against inflation. Year-over-year, price pressures escalated to 4.4% in April, an uptick from the previous month’s 4.3% and significantly exceeding the average economist’s prediction of 4.1%. This marks the first rise in overall inflation from the last June. Ironically, higher interest rates are intended to tackle inflation, but rising rent prices and mortgage interest costs contributed the most to the all-items CPI increase last month.

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  • Bank of Canada Holds Policy Rate at 0.25% and Maintains QE Program At Current Pace

    External Author   |  

    Blog by Kolbi Turner

    Bank of Canada Holds Rates and Bond-Buying Steady

    Much has changed since the Bank of Canada’s last decision on January 20. While the second pandemic wave was raging, new lockdowns were implemented in late 2020, and there were fears that the economy, in consequence, was likely to grow at a 4.8% annual rate in Q4 and contract in Q1. Instead, the lockdowns were less disruptive than feared, as Q4 growth came in at a surprisingly strong 9.6% annual rate–double the pace expected by the Bank.

    Rather than a contraction in Q1 this year, Statistics Canada’s flash estimate for January growth was 0.5% (not annualized). Strength in January came from housing, resources and government spending, and the mild weather likely helped. In today’s decision statement, the central bank acknowledged that “the economy is proving to be more resilient than anticipated to the second wave of the virus and the associated containment measures.” The BoC now expects the economy to grow in the first quarter. “Consumers and businesses are adapting to containment measures, and housing market activity has been much stronger than expected. Improving foreign demand and higher commodity prices have also brightened the prospects for exports and business investment.”

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  • Family Day Ideas

    Kolbi Turner   |  

    Blog by Kolbi Turner

    For those who celebrate Family Day, we thought we would highlight some ideas for special things you can do with your loved ones, and remind them how much you care!

    From crafts and cooking to volunteer work or exercise classes, below are a few ways you can celebrate Family Day this year:

    Family Day Ideas

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  • Economic Insights from Dr. Sherry Cooper

    Kolbi Turner   |  

    Blog by Kolbi Turner

    Even bond traders and economists are stumped about what the next few years will bring. The repercussions of a global economy that stopped suddenly, shed millions of jobs and initially contracted 30% only to rebound in a flash on the back of free-money government programs are still being felt.

    Economic Insights from Dr. Sherry Cooper

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  • What to Know about Second Mortgages

    Kolbi Turner   |  

    Blog by Kolbi Turner

    A second mortgage is a mortgage that is taken out against a property that already has a home loan (mortgage) on it. Generally people take out second mortgages to satisfy short-term cash or liquidity requirements, have an investment opportunity or to pay off higher-interest debts (such as credit cards and student loans) that a second mortgage might offer.

    What to Know about Second Mortgages

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  • Bank of Canada Hikes Overnight Rate 50 bps to 4.25%

    External Author   |  

    Blog by Kolbi Turner

    the bank of canada hiked rates the full 50 bps

    The Governing Council of the Bank of Canada raised its target for the overnight policy rate by 50 basis points today to 4.25% and signalled that the Council would “consider whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target.” This is more dovish language than in earlier actions where they asserted that rates would need to rise further. Some have interpreted this new press release to imply that the Bank of Canada will now pause or pivot. I disagree.

    I expect there will be additional rate hikes next year, but they will be more measured and not on every decision date. I also feel that the Bank will refrain from cutting the policy rate until 2024.

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